What is the process for showing the California Franchise Tax Board that my Social Security income is not subject to state income tax?

In California, Social Security income is not subject to state income tax, so you show this by subtracting any federally taxed benefits from your income on your state tax return. The California Franchise Tax Board (FTB) already knows this is the law; the process is simply to file your return correctly. Here is the process for correctly reporting your Social Security income: Step 1: Gather Your Tax Documents Collect your Social Security Benefit Statement (Form SSA-1099) and all other income documents. The SSA-1099 shows the total amount of benefits you received for the year. You will also need your completed federal tax return (Form 1040). Step 2: Determine Federal Taxability First, complete your federal income tax return. The IRS has a formula to determine if a portion of your Social Security benefits is taxable. If some of your benefits are taxable, they will be included in your Federal Adjusted Gross Income (AGI). Step 3: Start Your California Tax Return (Form 540) Begin filling out your California Resident Income Tax Return, Form 540. You will transfer your Federal AGI to your California return. This initial number will include any of your federally taxed Social Security benefits. Step 4: Subtract Your Social Security Income Use California Schedule CA (540) to make adjustments to your federal AGI. On Part I, Section B, there is a specific line for "Social Security benefits." On this line, enter the full amount of Social Security benefits that were taxed and included in your Federal AGI. This action subtracts the non-taxable income from your California income total. Step 5: File Your Return File your California Form 540 and the attached Schedule CA (540) with the Franchise Tax Board by the annual April 15 deadline. By correctly completing Schedule CA, you have officially shown the FTB that your Social Security benefits are not taxable in California. Important Details and Nuances: If none of your Social Security benefits are taxable at the federal level, then they will not be included in your Federal AGI, and you will have nothing to subtract on Schedule CA. The subtraction is only for benefits that were taxed federally. If you receive a notice from the FTB questioning your income, respond promptly with a letter explaining the income is from Social Security, and include a copy of your SSA-1099. Warnings and Limitations: This process applies to Social Security retirement, survivor, and disability (SSDI) benefits. Do not ignore any correspondence from the FTB, as there are strict deadlines for responding to notices. Tax forms and line numbers can change annually, so always refer to the instructions for the current tax year, available at ftb.ca.gov. This is general information and does not constitute legal advice. For complex situations, such as receiving an FTB audit notice, you should consult with a qualified California attorney or tax professional.
Disclaimer: This information is for general guidance only and should not be considered as legal advice. Please consult with a qualified attorney for specific legal matters.
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Updated: August 14, 2025
Social Security

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